Ryan says windfall revenues will be lower due to falling gas prices

The amount raised from a key measure to address windfall revenues for energy companies will be on the lower end of projections due to falling gas prices, Green Party leader Eamon Ryan has said.

The Government approved the general scheme of legislation to introduce measures to tap the windfall gains on Tuesday, including a “solidarity contribution” on the profits of fossil fuel companies.

It will also introduce a cap on the market revenues of generators like wind, solar and oil companies who have benefitted from the impact of higher wholesale electricity prices driven by record gas costs, but who do not have to pay for gas themselves.

The Government estimates that it will get between €280 million and €600 million from the measures.

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Mr Ryan said the cap on electricity generators will be set at €120 a tonne and be operable from the end of December to the end of June. “If anyone has passed on the gain to the consumers, it won’t apply, or if the supply company has been making the profit rather than the generator, it will apply to the supply company,” he said.

“The solidarity contribution from fossil fuel companies - the likes of the Corrib gas field, Whitegate Oil Refinery, we set a tax rate of 75 per cent, that applies for the year 2022 and 2023,” Mr Ryan said, speaking after Tuesdays’ Cabinet meeting. He said the rate was at the higher end of comparative policies from other European countries.

“I think that’s appropriate, recognising that our corpoate tax rate is lower, our royalty rates don’t apply here in the same way that they could in other countries,” he said, adding that revenues will start accruing in the third quarter of the year. “Likely lower than originally expected, because the price of gas has come down, but a range between €280 million and €600 million.”

Asked what the revenues would be used for, he said they would be ringfenced for electricity consumers. Decisions would be taken on how to use it as part of the budgetary process, Mr Ryan said, but he would not be drawn on the prospect of using it to fund another electricity price credit. “We’ll wait until the budget process to see what further measures are needed,” he said.

With a price tag of about €400 million for each electricity tax credit, Mr Ryan said the revenue from the energy cap element of the package “in itself mightn’t be able to fund that sort of response”.

He conceded the retrospective nature of the tax was unusual, adding that the decision at European level to proceed with the charge was being challenged by ExxonMobil. “We believe the legislation we’ve introduced is strong, is appropriate and delivers on the objectives,” he said.

“It’s not attacking any one company or looking to unfairly take revenues from them, it’s looking to take some of the excess profits which was not earned because of any of their activities, but because of what [Russian president] Vladimir Putin is doing,” he said. “I think that’s an appropriate and legal response.”